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Presentation yinyren


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Presentation yinyren

  1. 1. ‘Define FOB and CIF contract and what are its advantages and disadvantages in practice’ Prepared by Gan, Yin Yen (lead writer) Lee, Pay Wen (lead writer) Raychelle Tan Tee, Siaw Chin
  2. 2.  A type of contract for the international sale of goods in which the seller's duty is fulfilled by placing the goods on board a ship  Under the International Commercial Terms (INCOTERMS) 2000, risk and responsibility shift from the hand of a seller to buyer when:-  the goods are passed over to place off the dock or on the ship  the goods are loading at the nominated port  the goods is being cleared for export by the seller
  3. 3.  Wimble, Sons and Co v Rosenberg  the seller must put on board ship goods which conform to the contract  the seller must must pay all charges in connection with loading  the seller is not obliged to book shipping space in advance Whereas,  the buyer must nominate the ship to carry the goods and notify the seller of the nomination in time to allow the seller to deliver the goods on board  the buyer has to bear all the costs and risks of loss or damage arising to the goods from that point NOTE: English law and American law did not give the same meaning to the FOB term which was considered to be a general delivery term.
  4. 4.  In Pyrene and Co Ltd v Scindia Steam Navigaion Co Ltd, Devlin J defined the existence of three variations of the FOB contract, depending on the intent of the parties and such classification was approved in the case of El Amira and El Aminia.  First variation -- classic FOB contract occurs when the seller put the goods on board for the account of the buyer, procuring a bill of landing, while the buyer nominating a vessel  Second variation – additional services of FOB  Third variation -- modern FOB, occurs with the buyer nominating the vessel and making the contract of carriage Also known as extended FOB
  5. 5.  To buyer,  the cost for FOB are lower compared to other contracts such as CIF  by nominating the ship, it is presumed that the buyer enters into FOB with the seller and hence, the buyer could get a better deal  the buyer is in control of the carriage contract, thus manages more securely the cost of it and same applies to the insurance costs  To seller,  Benefited when carriage cost are high or likely to fluctuate because the buyer must bear the risk of changes in the cost of carriage and is responsible for making carriage arrangements
  6. 6.  To buyer,  Burdensome duties impose on them, inexperience buyers are left worsen off  the buyer needs to bear alone with the risk of fluctuation under the FOB contract  To seller,  he must bear the full liability for the coast and safety of the goods until the point of their passing the ship's rail because the risk transfer point tends to be misapplied Referring to the ship’s rail
  7. 7.  there are risks that both buyers and sellers have to consider before entering into a FOB contract taking into account all the factors and evaluate the contract in terms of security and benefits  the law should be clear, consistent and predictable so as to give parties in their transactions as much security as possible